LLC revisions under review in Trenton, while fracking prohibition advances

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February 9, 2012 at 1:28 PM

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The largest overhaul of state laws overseeing limited liability corporations could advance today, while another bill banning hydraulic fracturing in the state did advance.

The Senate Commerce Committee is scheduled to discuss the LLC bill, S-742/A-1543, which takes into account nearly two decades of experience with LLCs since the first state law overseeing them was passed in 1993.

The corporations allow partners to report business income as personal income, while offering corporate-style liability protections for their partners.

The changes include eliminating the default — and often overlooked — rule that LLCs have a limited life; permitting LLC operating agreements to oral, written or implied, based on how the LLC has operated; allocated LLC profits and losses on a per capita basis, unless otherwise agreed; and allowing an LLC member to seek to dissolve the company if its managers are acting in a manner harmful to the member.

The changes are supported by the New Jersey Chamber of Commerce, according to its senior vice president, Michael Egenton.

In other news, the Senate Environment and Energy Committee advanced a bill that would prohibit hydraulic fracturing, or fracking.

James Benton, executive director of the New Jersey Petroleum Council, opposed the measure, saying safety concerns "have been addressed in the industry standards, working with the state regulators."

Benton added that the Marcellus Shale could meet the state's energy needs for hundreds of years. Opponents of the bill have said there have only been a handful of isolated incidents regarding spills by companies that weren't following industry standards.

New Jersey Environmental Federation Campaign Director David Pringle said the state should focus on renewable energy, which he said helps the economy in the long run by lessening the effect of global warming.

"There's no such thing as a best practice," Pringle said, adding in a reference to incidents linked to fracking, there is only a "fewest-faucets-on-fire practice."

The state is under a one-year fracking moratorium supported by Gov. Chris Christie.